News

iSuppli estimates low-end iPad component cost of $219

By Charles Starrett ● Wednesday, February 10, 2010

New estimates from iSuppli suggest the 16GB, non-3G iPad carries a Bill of Materials (BOM) cost of just $219, with manufacturing costs estimated to be $10, bringing the total cost of the low-end machine to $229. According to the report, the mid-range version of the iPad, with 32GB of memory and 3G wireless capabilities, will carry a BOM of roughly $276, making it the most profitable member of the family on a percentage basis. iSuppli believes that the display and touchscreen interface costs $80 per unit, making it the most expensive component of the 16GB and 32GB models, and second only to the 64GB of NAND flash memory—estimated to cost $118—in the top-of-the-line model. Other component estimates include a cost of $17 for the A4 processor, $24.50 for wireless components, and $17.50 for the battery. Notably, iSuppli’s estimates are based on the cost of components expected to be used in the iPad, and not on an actual teardown of the device, nor do they include other expenses such as software, royalties, and licensing fees.

Comments

1

I had ballparked it at about $200 without access to all the data they have, so not surprising.

I do wonder, though, with the completely closed software platform and, potentially, a loosely closed bookstore, plus an almost certainly proprietary future media subscription service for premium electronic “magazines”, why the Mac Book Pro type profit margins? This is a platform that, assuming it becomes even half as established as the general iPod platform, is going to generate a ridiculous amount of profit for Apple from their cut of software and media sales. Because while I’m sure there are some licensing and royalty fees for the device, they’re not another $200 on top of the hardware.

Whatever other complaints I may have about the platform and its value aside, I really don’t think Apple is being aggressive enough. A more or less $300 dollar mark up is a short term profit maker at the potential cost of the long term success of the platform. Although, knowing Apple, they probably calculated this grossly inflated price relative to how many of the devices they expect to be able to get into the sales channel this spring, i.e., the demand they predict with this price point is probably equal the number of units they will have available initially. They probably already have both incremental upgrades and large price cuts this fall already scheduled to then get the $350 entry level iPad under trees for Christmas 2011.

Posted by Code Monkey in Midstate New York on February 11, 2010 at 9:35 AM (CST)

2

Make that Christmas 2010, oops.

Posted by Code Monkey in Midstate New York on February 11, 2010 at 9:35 AM (CST)